What constitutes underreporting of Gross Sales for a Bang Cookies franchise that leads to default?

According to Bang Cookies' 2024 Franchise Disclosure Document, underreporting Gross Sales can lead to a default of the franchise agreement if an inspection or review of the franchisee's records reveals an underreporting of Gross Sales, or any other metrics or data, resulting in the underpayment of obligations, payments, and/or fees due to Bang Cookies by 5% or more within any week, month, or Accounting Period selected by Bang Cookies.

Gross Sales are defined as the total dollar sales from all business and customers of the Franchised Business, including revenues from any source, whether in cash, credit, or other consideration. Gross Sales also include revenues from business conducted within or outside the Designated Territory that is related to the Franchised Business or a Competitive Business located at the franchisee's shop. Gross Sales do not include sales taxes collected and remitted to the proper taxing authority or authorized promotional discounts provided to shop customers.

This means that if Bang Cookies discovers that a franchisee has underreported their sales by 5% or more, leading to an underpayment of royalties or other fees, Bang Cookies has grounds to declare the franchisee in default. This clause is designed to protect Bang Cookies' revenue stream and ensure accurate reporting from franchisees. Franchisees should maintain meticulous records and accurately report all sales to avoid triggering this default provision.